PETALING JAYA: FACB Industries Inc Bhd has laid out a five-year business plan which will see it expanding aggressively across segments, ensuring a strong uptrend in its revenue and profits over the period and beyond.
Chief operating officer Chua Tiam Wee said that for starters it would set up a plant to make fittings in Vietnam. The facility, costing RM25mil, would boost its production capacity and buoy earnings.
“By doing this, we are also hoping to get a foothold in the booming domestic market there although the main aim of the plant is to further explore export markets,” he told StarBiz.
FACB has diverse business activities, including the manufacture of stainless steel pipes and fittings, production of Dreamland mattresses as well as property development and power plant operations.
Currently, about 80% of its revenue comes from steel manufacturing and trading division. Most of its steel products are exported, mainly to the United States.
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Chua Tiam Wee (left) and Bong Shee Cheng |
FACB's current production capacity of stainless steel pipes at its main plant in Shah Alam is 23,000 tonnes per year while production of fittings is 1,320 tonnes yearly.
There are also plans to expand the output capacity of stainless steel pipes at the local plant by 40% over the next five years.
“Over the past five years, we have registered compounded annual growth rate (CAGR) of 20% in revenue. We target CAGR of another 20% in revenue over the next five years.
“Also, backed by our expansion plans and higher-margin products, such as bigger-sized fittings and flat bars and structural ornamental tubes that we plan to develop, we are optimistic that our profit will grow by a CAGR of between 33% and 35% over the next five years,” Chua said.
Even at the current level of production, FACB was already the largest manufacturer of stainless steel pipes and fittings in South-East Asia, he said.
Locally, it controls almost 60% of the stainless pipe and fittings market. Yet, according to Chua, FACB still sees itself as a big-growth company and has set aside a capital expenditure of RM85mil.
Chua said the key growth drivers of the domestic steel market were oleochemicals and biodiesel, water, oil and gas and the construction sectors, given the increasing number of major government projects in these sectors.
FACB also has operations in China where it is involved in the manufacture of steel wires and mattresses, and power plant activities. Currently, China operations contribute about 5% to the group's revenue.
As for property development, Chua said the company was developing 127 acres about 20km from Kota Kinabalu. The mixed township development has a gross development value of just under RM700mil.
Group financial controller Bong Shee Cheng said the company had a healthy financial position.
“Our balance sheet is very healthy, we have net tangible assets of RM2.48 per share,” he said.
Based on the market closing price of RM1.19 yesterday, FACB is trading at a price/earnings ratio of 5.5 times, based on financial year 2007 earnings.
As at June 30, the company had RM115mil in debt while shareholders' funds stood at about RM242mil. This translates to a low gearing ratio of 0.48. It has a net cash position of RM23mil.
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